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Tesla Motors is not Toyota: A Contrast in Disrespect and Respect of People

By shmula, Last Updated October 18, 2008

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Apparently Tesla Motors shutting down their Detroit office and laid-off 90% of the office. The lucky 10% will be moved to San Jose, California. I have no problems with letting-go of staff — business is tough and times are very tough — but the way Tesla Motors went about it was inhumane, to say the least: They laid-off the people via a blog post and when the unlucky employees came to work, they could not log into their machines! (via gizmodo)

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One of the steps I will be taking is raising the performance bar at Tesla to a very high level, which will result in a modest reduction in near term headcount. To be clear, this doesn’t mean that the people that depart Tesla for this reason wouldn’t be considered good performers at most companies – almost all would. However, I believe Tesla must adhere more closely to a special forces philosophy at this stage of its life if we aspire to become one of the great car companies of the 21st century.

There will also be some headcount reduction due to consolidation of operations. In anticipation of moving vehicle engineering to our new HQ in San Jose, we are ramping down and will close our Rochester Hills office near Detroit. Good communication, tightly knit engineering and a common company culture are of paramount importance as Tesla grows.

I’m not questioning Tesla Motors’ motivation here or their business decision, but how they went about it is quite brutal. I like Tesla Motors’ approach to car development and hope the best for them — but this move is very short-term thinking. Electric car development is unique and those employees that were let-go have gained a very unique perspective on the challenges of car development and could be very useful in the future when Tesla Motors’ cash flow challenges are better. But, this experience of being let-go in an incredibly inhumane way might prevent those employees from considering future employment with Tesla.

Now, contrast the above with Toyota, which is also going through some very tough times right now (via Kevin Meyer).

Instead of sending the workers home, as the Detroit makers often do, Toyota is keeping them at the plants, though. The employees spend their days in training sessions designed to sharpen their job skills and find better ways to assemble vehicles.

At its Princeton plant, Toyota is using the down time to hone its workers’ quality-control and productivity skills. The company has pledged never to lay off any of its full-time employees, who are nonunion.

How big is this investment in training?

Toyota is “facing a significant lack of production work for a significant number of workers,” said Sean McAlinden, an economist at the Center for Automotive Research. He estimates the wage cost of idling the assembly lines at the two plants at $35 million a month.

How does that compare with your training budget? So what kinds of projects are the Toyota folks working on?

In Princeton, senior plant manager Norm Bafunno said he can already see the benefits of the training. Mr. Bafunno cites a Teflon ring designed by an assembly worker during the down time that helps prevent paint damage when employees install an electrical switch on the edge of a vehicle’s door.

Near one idle line, assembly worker Bob Mason sat with four others employees around a table looking at a flip chart with PowerPoint printouts on it. The employees went through a problem-solving module based on a technique in Toyota’s production system.

Toyota understand the value of knowledge, and that employees are more than simply a pair of hands.

Jim Lentz, president of Toyota Motor Sales, the company’s U.S. sales unit, said the company believes keeping employees on the payroll and using the time to improve their capabilities is the best move in the long run. “It would have been crazy for us to lose people for 90 days and [then] to rehire and retrain people and hope that we have a smooth ramp-up coming back in,” Mr. Lentz said.

Mr. Mason, a 40-year-old former firefighter, added: “One of the major things that everyone is grateful for is that they thought enough of us to keep us here.”

Tesla Motors is not Toyota — a clear contrast in their view of people.